Johannesburg - As the National Union of Metalworkers of SA grows more disgruntled with the motor industry over its wage demands, other bodies are warning that the steel sector is in crisis.
On Tuesday, Numsa issued a statement saying, despite three rounds of negotiations with the Retail Motor Industry Organisation, it has again left with empty hands. The union has already threatened a strike and is now threatening to close down fuel stations.
The current agreement expires on August 31 and covers a number of sectors, including automotive component manufacturers, vehicle body builders, service and repair workshops, fuel service stations, vehicle dealers and automotive parts and accessories retailers.
Numsa is negotiating for what it calls a “living wage”, which it wants to come in from September. It notes petrol service station employees are earning as little as R17.82 an hour, it says.
“Employers have rejected Numsa’s demands for a wage increase for the workers. Employers in this sector are convinced that their workers are overpaid and have offered not even a cent as a wage increase.”
Read also: Numsa declares dispute, strike possible
Numsa says it intends instituting a dispute of interest, which could result in a national strike, which it hopes will shut down petrol stations and freeze operations across the sector. The Commission for Conciliation, Mediation and Arbitration will facilitate the dispute on July 13, while the union will, from Saturday, start collecting a mandate from its members.
Red alert
However, the wage demands and threatened strike in the motor sector come at a time when the sector is in crisis, and could shed more jobs.
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) says the latest employment data from Stats SA - which shows SA lost 15 000 jobs in the first quarter - starkly “reflects the winding down of the metals and engineering sector”.
Chief economist Henk Langenhoven notes employment in the steel sector - which has seen a flurry of retrenchments after plants such as Highveld Steel closed down - is now at 381 330.
Langenhoven adds the latest purchasing managers’ index gives little consolation that conditions will improve shortly.
He notes inventory levels in the metals and engineering sector declined to very low levels towards the end of 2015, and higher tariffs made stocking up inevitable, especially as there is a possibility of a strike - leading to shortages - in the automotive sector. This is impacting demand going ahead.
Adding to this, concerns about the downward trends in both the automotive and mining sectors have increased lately, and vehicle sales could deteriorate further, says Seifsa.
The organisation adds that the job losses in the sector are very serious and reflect the crisis situation experienced by companies in the metals and engineering sector. Employment numbers declined 2.3 percent in the first quarter, and 3.3 percent over the last six months, it points out.
“Over six months, production declined by nearly 6 percent, over 12 months by nearly 5 percent, and compared to a year ago, the decline is nearly 3 percent. These numbers indicate that job losses may accelerate further during 2016,” says Langenhoven.
“The metals and engineering sector is in a critical condition and it seems as if the patient will suffer a serious setback over the next six months before improvements can be expected.”
Protection
ArcelorMittal says the government’s growth aspirations won’t be met if the steel industry collapses. The local steel industry has been battling in the midst of low prices, rising costs and a threat from cheap Chinese imports.
Local steel makers want import tariffs to be hiked to protect the sector.
The International Trade Administration Commission (Itac) of South Africa has approved the applications, but tariff duties on hot rolled coil and other bars and rods have yet to be implemented.
ArcelorMittal’s 2016 Factor Report says, if the local industry collapsed, it would take 10 years to re-establish the infrastructure, skills, logistics network and downstream industries required for a viable and thriving local steel industry.
The National Employers Association of South Africa is just as concerned over job losses, but it argues, in an open letter to Trade and Industry minister Rob Davies, that the steel industry crisis is because of protectionism.
The fourth such letter argues that the government should not be protecting the local liquid steel industry, as this is the reason for the crisis, but should rather allow cheap imports.
“The downstream industry is currently paralysed by the already introduced protectionist- and looming safeguard-duties with the resultant constant shedding of jobs.”
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